Sebi hits RBI wall on mandatory exchange-trading in corp bonds

Sebi hits RBI wall on mandatory exchange-trading in corp bonds

FPJ BureauUpdated: Friday, May 31, 2019, 10:58 PM IST
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New Delhi : To deepen corporate bonds market, regulator Sebi wants to make it mandatory for such securities to be traded on stock exchange platforms, but the RBI has suggested keeping this option voluntary.

As it seeks to deepen the corporate bonds market, the Securities and Exchange Board of India (Sebi) has approached the Finance Ministry, Corporate Affairs Ministry and the RBI, among others, to address certain impediments in this regard.

In this regard, Sebi had written to the RBI to make trading in corporate bonds on stock exchange platforms mandatory in a phased manner, a senior official said.  However, the RBI is of the view that exchanges should work with market participants to make exchange platforms a preferred mode for such transactions, rather than making it mandatory.

Currently also, some corporate bonds are traded on stock exchanges but a larger volumes take place in the spot market. The capital markets regulator is now looking to conduct wider consultations on this issue, as it feels the move would bring in the much-needed transparency in the corporate bonds market and also make the process of raising funds through such securities much easier for the companies as well as investors.    On its part, Sebi has already allowed re-issuance of existing debt securities by a corporate issuer within a specified time period rather than launching a new issue.

This would help create large stocks in any given issue, thereby helping create secondary market liquidity and also avoid the fragmentation with multiple issuances.

Sebi has also requested the RBI to consider enabling trading members in the debt segment of stock exchanges to borrow funds to provide market making in the corporate bonds market.

The capital markets regulator also proposed a common reporting platform for all securitised debt instruments, for which the RBI is the main regulator and which are mostly issued by RBI-regulated banks and NBFCs.

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…reconstitutes Takeover Panel

New Delhi : Capital markets regulator Sebi has reconstituted its Takeover Panel, which looks into the applications seeking exemption from the mandatory open offer that an acquirer needs to make to minority shareholders.

The newly notified Takeover Panel would be chaired by Justice N K Sodhi, the Former Chief Justice of the High Courts of Karnataka and Kerala and also the Former Presiding Officer of the Securities Appellate Tribunal. Sodhi had also chaired the Sebi panel that revisited two-decade old insider trading norms, which came into force earlier this year. S Ravi, a renowned Chartered Accountant who has been on boards of various PSUs and is partner at Ravi Rajan and Company, has been appointed as a member.  The other members of this Takeover Panel include Darius Khambata (former Advocate General, Maharashtra), M S Raghavan (Former Chairman and Managing Director of IDBI Bank) and Thomas Mathew T (Chairman of MCX Stock Exchange and former Chairman of Life Insurance Corporation of India).

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